Rate Sensitives Buck Downdraft
The broad decline in stocks Friday
took down most of the tradable funds, but financial stocks and funds swam
against the tide. An economic slowdown would be hard on profits, hurting tech,
but keep the Fed sidelined, helping rate-sensitive financials.
The Utilities SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating), whose
stocks act like fixed-income securities because of their companies high dividend
payout ratio, jumped 3.2%, clearing a 12-week base. It was the day’s biggest
gain among the exchange-traded
funds
Among the other rate-sensitive ETFs,
the Regional Banking HOLDR
(
RKH |
Quote |
Chart |
News |
PowerRating) added 2.5%, the Utility HOLDR
(
UTH |
Quote |
Chart |
News |
PowerRating)
2.3%, the Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating) 2.3% and the Dow Jones Financial iShares
(
IYF |
Quote |
Chart |
News |
PowerRating)
1.3%.
For further confirmation that Friday’s
action reflected the broad outlook on rates, not just factors unique to
financial companies, note the 1.8% gain in the Cyclicals/Transportation SPDR
(
XLY |
Quote |
Chart |
News |
PowerRating)
Biotech stocks, which often run
counter to computer-related technology stocks, swam against the ebbing tide. The
Biotech HOLD
(
BBH |
Quote |
Chart |
News |
PowerRating) picked up 1.1%.
More negative news whacked the
semiconductor stocks, which in turn rippled through the rest of the technology.
Chip-gear maker, SpeedFam-IPEC
(
SFAM |
Quote |
Chart |
News |
PowerRating), warned that fiscal first-quarter
results would fall below Wall Street expectations.
The Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) lost
4.8%, the day’s sharpest decline among the exchange-traded funds. The Internet
Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating) fell 3.4%, the Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating) 3.2%,
the Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating) 3.1%, the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating)
3.0%.
If you’re new to exchange-traded funds,
be sure to visit TradingMarkets’ Knowledge Center,
dedicated to explaining the basics of trading and active investing in ETFs and
mutual funds. Just click on the Funds tab
near the top of this page, then click on the Knowledge
Center tab.Â
You also will find lessons on trading
exchange-traded funds in the Stocks Education area of TradingMarkets.com. In
particular, check out my three-part series on trading ETFs, starting with
Average Crossovers. I also recommend newcomers read my tutorial,
HOLDRs: Unique Opportunity And Risk.